Strong Dollar May Muscle its Way Through 2017

January 14, 2016 10:32 AM
 
money-3-1512806-1280x960

The USDA-ERSS is predicting that the strong U.S. dollar will flex its muscles at a slower rate this year but still maintain a slow strengthening pattern through 2017 before turning toward a gentle decline.

Grain marketer Ted Seifried explains how this can negatively affect U.S. grain markets.

“For one, it creates a more difficult situation for U.S. exports,” he says. “As the U.S. dollar gains strength compared to other currencies, it makes U.S. products more expensive. This comes at a time when the global grain market is very competitive already. It [also] creates a competitive advantage on imports to the U.S., and in extreme cases, cheap foreign grain could help keep a lid on U.S. prices.”

The U.S. dollar is not the only determining factor for grain prices, but it has held a noticeable influence in recent years, Seifried says.

“We’ll need to keep an eye on it,” he says.”

ag_exchange_rate

USDA-ERS exchange-rate projections through 2025 predict the dollar will gain strength at a slower pace in 2016 and 2017, then trend lower (again at a slow pace) from 2018 through 2025. This exchange rate is determined my measuring the dollar’s value against 79 foreign countries, weighted by share of U.S. ag exports.

Back to news


RELATED CONTENT

Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close